Case Study
THE CORPORATE ECOSYSTEM
SERVICES REVIEW CASE STUDY:
ANGLO AMERICAN
SUZANNE OZMENT AND FRANCISCO ALMENDRA
WHY ANGLO AMERICAN IS USING THE ESR
The Brazilian government plans to increase metal ore output by 30 percent by
2030, with an increase in extraction from the Amazon region. This is a significant
business opportunity for mining companies, but balancing commercial and
conservation efforts presents a challenge.
The Corporate Ecosystem
Services Review (ESR) is a
proven 5-step method to help
managers identify business
risks and opportunities
arising from their dependence
and impacts on ecosystem
services. This case study
describes one company’s
experience and results in
applying the ESR.
Anglo American, a large mining company, used the Corporate Ecosystem Services
Review (ESR) to inform the design of a “greenfield” mining project—that is, a new
project in an area unconstrained by existing infrastructure or prior work. The new
Jacaré Project was located in the Brazilian Amazon Basin. Taking an extra step
beyond conventional environmental impact assessment, the sustainability team
applied some Anglo American sustainable development assessment tools—
such as their environmental way and socioeconomic assessment toolbox— in
combination with the ESR, and therefore was well-equipped to investigate
strategies to cost-effectively advance corporate water and energy sustainability
goals (Anglo American 2013a, Anglo American 2013b).
Spearheaded by the company’s sustainable development department, the ESR
team included environmental engineers and analysts, Jacaré site managers,
as well as regulatory affairs and communications personnel. To get the most
value out of their ESR pilot project, Anglo American joined a Brazilian business
sustainability initiative called Parceria Empresarial pelos Serviços Ecosistêmicos
(PESE). PESE is a partnership among companies and civil society to demonstrate
the business benefits of ecosystem services in Brazil. The eight companies
participating in PESE executed their ESRs at the same time, leading to beneficial
cross-sector learning and support throughout the process.
This case is an accompaniment
to The Corporate Ecosystem
Services Review Version 2.0
(2012), which is available online
at www.wri.org/ecosystems/esr.
It was produced in association
with CEBDS, GVces, and USAID.
WRI CASE STUDY | 1
STEP 1. SELECT THE SCOPE
Freshwater Supply and Quality
To keep the ESR process focused and manageable, the
first step is to select a scope of assessment that is strategic,
timely, and internally supported by the company.
The mine’s ore refining processes will fully depend on water
sourced from the nearby São Sebastião River. Using the best
available water recycling technologies already employed at
its current operations, the mine will be able to reuse
80–90 percent of its water, and will draw the remaining
10–20 percent from the river (Anglo American 2013c). The
company plans to invest in rain harvest technologies that will
minimize water intake from the São Sebastião River during
rainy periods. These technologies can decrease the operation’s
impact on the river.
Anglo American focused the ESR on a prospective greenfield nickel mining project located in São Félix do Xingu,
Pará, in the Amazon region. The project is undergoing a
prefeasibility assessment.
While São Félix do Xingu used to be mostly contiguous
rainforest, over recent decades the area has experienced
widespread deforestation and now presents a mosaic of
cattle pasture, settlements, and fragmented forests. The
consequent loss of regional ecosystem services poses some
challenges to Anglo American’s operations, particularly
in securing access to natural resources and building good
relationships with local stakeholders. The ESR provides
guidance on developing business strategies that respond
to ecosystem change, and therefore is a good fit to inform
the prefeasibility and impact assessment phases of this
mine’s development.
The ESR team focused on decisions about water and energy
use for the mine. The Jacaré Project will use significant
amounts of water and faces various options on how to
manage water intake and use. The company is considering
powering the mine with wood biomass fuel instead of coal.
The opportunity is to reach 50 to 100 percent biomass fuel
use in the future. The team used the ESR to better understand the financial, social, and environmental trade-offs
among various technological options to inform design plans
and an investment strategy.
STEP 2. IDENTIFY PRIORITY
ECOSYSTEM SERVICES
To focus on the ecosystem services most relevant to business
performance, the second step of the ESR is to prioritize a
few key ecosystem services by evaluating the degree of the
company’s dependence and/or impact on more than
20 ecosystem services relevant to the scope of assessment.
Anglo American’s team used the Anglo American assessment
tools and the ESR dependence and impact assessment tool
together to prioritize the ecosystem services most important
to the mine. The team decided to focus on biomass fuel
(wood), soil quality, and freshwater because of the operation’s
high dependence and potential impact on these services.
2 |
Provision of Biomass
Anglo American is considering replacing up to 10 percent
of its coal use as fuel at the mine with wood biomass. This
would represent a reduction of about 1.25 million metric tons
of coal over the lifetime of the mine. Since both fuels have
similar calorific content, Anglo American could source up to
38,000 metric tons of wood biomass per year, representing
approximately 7,700 hectares of plantation forest (Sedjo
2013). The long-term opportunity is to reach 50 percent to
100 percent biomass fuel use.
STEP 3. ANALYZE TRENDS IN
PRIORITY ECOSYSTEM SERVICES
Step 3 of the ESR guides an analysis of the conditions and
trends in the ecosystem services prioritized in the previous
step, as well as drivers of environmental change that
significantly influence those trends.
Freshwater Supply and Quality
The São Sebastião River is located in the Xingu watershed
and provides water for the 99,000 people in the city of São
Félix do Xingu, several large-scale mining projects, and large
cattle ranching areas that encompass Brazil’s biggest cattle
herd of 1.7 million animals (Anglo American 2013c).The river
is located in a high-precipitation region, and has a distinct
dry-wet seasonal pattern in water flow. Siltation and erosion
from cattle ranching and deforestation at river banks by smallscale farmers and landless peasant migration have begun
interfering with water flow, and increasing economic activity
in the area is putting pressure on the watershed’s supply
(Anglo American 2013c). Water use permits are becoming
increasingly difficult to secure from the local government. The
government also has signaled its intention to develop a river
basin committee, which may result in the imposition of fees
for drawing water in the future. Such fees have already been
implemented in other regions of the country.
The Corporate Ecosystem Services Review Case Study: Anglo American
Climate change and deforestation also are shifting regional
precipitation and water flow patterns. Studies show that
increasing deforestation in the Pará region of the Amazon
will likely lead to lower levels of rainfall (Marengo et al.
2011). Furthermore, deforestation and climate change may
lead to more frequent and severe droughts (Marengo et al.
2011). Water supply challenges may create problems not
only for Anglo American’s mining operation, but also for
reforestation initiatives, as a compromised water supply
may lead to lower soil quality and biomass growth rates.
São Félix do Xingu and other communities downstream
from the mine lack water treatment and sanitation
systems. In the future, growing water demand for other
uses could potentially compete with Anglo American
for water use. Other upstream users include mining
companies and cattle ranches, which may also impact
water quality through effluents and pollution from runoff
carrying fertilizer and animal wastes.
Provision of Biomass
To understand the viability of local wood biomass supply
as a reliable energy source, Anglo American’s ESR team
assessed how regional supply and demand for biomass is
likely to change in coming years. The region is undergoing
significant economic development and a consequent growing
energy demand, traditionally met through biomass fuel.
Anglo American itself would be contributing to the increase
in demand if it invests in biomass-compatible energy
systems, and could also use wood biomass as fuel from its
own property, since it would be cleared for mining operations anyway.
According to the current scenario, switching 10 percent
of energy supply from coal to burned biomass would save
$29.5 million over the 39 years of the mine’s lifespan. This
is a result of biomass prices being slightly lower than coal,
which would have to be imported from South Africa or
Colombia, even without taking into consideration potential
incentives for clean energy. Local partners developing
biomass production operations would supply the biomass.
Developing local reforestation projects to secure access
to biomass fuel pose another set of important trends and
conditions to be analyzed. There is significant uncertainty
in the Brazilian Amazon regarding land tenure and ownership rights, driven by a history of land grabbing and erratic
enforcement by government agencies. This creates challenges for Anglo American, as reforestation development
would require additional land ownership. The government
recently started to enforce land cover legislation more
vigorously and prioritize native species in reforestation
projects. Moreover, potential third-party suppliers of
biomass include small farmers and landowners in the
region. These farmers and landowners are not trained in
forest management, but have been working with international nongovernmental organizations in local projects to
support entrepreneurship and capacity building.
STEPS 4 & 5. IDENTIFY BUSINESS
RISKS & OPPORTUNITIES
AND DEVELOP STRATEGIES
Step 4 of the ESR evaluates how trends in ecosystem services
can impact the company, either positively or negatively. Step
5 of the ESR focuses on creating new business strategies that
address the risks and opportunities identified in the previous
step. Actions can be grouped under three categories: internal
changes, external engagement with stakeholders or sector
players, and public policy engagement.
Following ESR steps 1–3, Anglo American’s ESR team
identified risks and opportunities that would contribute
directly to the strategy development for the mine’s design,
largely focused on the technology choices for the mine’s
energy and water use.
Freshwater Supply and Quality
The ESR team weighed risks and opportunities associated
with investing in water-saving and sanitizing technology
that would reduce the mine’s water use and address
downstream communities’ concerns about water quality.
Operational risk: Water scarcity caused by economic
growth and climate change. Population growth in communities upstream and new projects such as hydropower plants,
other mining operations, and cattle ranches may threaten
the supply of water to the proposed Anglo American mine,
risking halting mining operations in times of drought. Local
climate change and the “drying of the Amazon” could also
contribute to the risk of water scarcity (Marengo et al. 2011).
Operational opportunities: Corporate water conservation practices can reduce water footprint. The installation
of rain capture and storage systems would allow Anglo
American to decrease its operation’s dependency on the
local river’s water supply and could reduce its operational
expenses. New recirculation and evaporation optimization
WRI CASE STUDY | September 2013 | 3
techniques to reduce water losses during the ore refining
processes could also reduce water use at the mine. In addition to investing in these technologies to improve the security
of operational performance, Anglo American can inform
stakeholders about such practices to protect its reputation.
biomass from the open market, which poses challenges on
verifying the sustainability and legality of biomass.
The team also considered running corporate-owned reforestation projects, but there are legal uncertainties regarding land
tenure and permitting for reforestation projects.
Regulatory and reputational risk: Reductions in freshwater
availability and quality can threaten the company’s access to
water usage permits. Downstream communities may blame
Anglo American for water quality deterioration or reductions
in supply, even if the mine is taking all necessary precautions
according to law. Increasing pressure on the watershed’s
resources from economic growth could pose future challenges
to securing water usage permits from government authorities,
or could increase the cost of permitting.
Reputational opportunity: Promote local reforestation
and secure access to biomass in ways that reinforce Anglo
American’s relationships with local communities and
NGOs. Anglo American can inspire local reforestation of
degraded lands in São Félix do Xingu by being a guaranteed
buyer of biomass from land owners that participate in
native tree planting and sustainable forest management
programs. Such a program would require technical assistance for farmers and cooperation with nongovernmental
organizations in the area. Such a program could provide
reputational benefits to the company by raising local
income levels, restoring hydrological functioning of the
region, and revitalizing biodiversity.
Reputational opportunity: Water treatment of effluents
and bringing sanitation facilities to downstream communities could reinforce relationships. In a regional context
of deteriorating water quality and the lack of water and
sanitation infrastructure in local communities, bringing
sanitation facilities to the downstream communities would
allow Anglo American to address perceived water quality
impacts. By treating and sanitizing water flowing downstream as part of local development efforts, the company
can burnish its public image and provide downstream
communities with better water quality, while reducing
water-related risks.
Provision of Biomass
The ESR team weighed risks and opportunities associated
with the decision to invest in the biomass combustion technology needed to use biomass as an energy source, along with
the respective biomass procurement/production strategy.
Operational and reputational opportunity: Biomass use
reduces operating costs and the carbon footprint of the
mine. Anglo American has already developed an economic
case for sustainably procuring biomass fuel over coal.
Biomass fuel aligns with the company’s sustainability goals
regarding carbon emissions, and reinforces a positive brand
image (Anglo American 2012).There is also potential to
recoup part of the upfront investment in a biomass-run
operating system by generating and selling carbon credits
in international voluntary markets.
Regulatory risk: uncertainty of biomass legality, and legal
uncertainty of reforestation projects. The biggest barrier for
Anglo American to switch from coal to biomass fuel is the
question of how and where to access the raw materials over
the lifetime of the project. The ESR team considered procuring
4 |
NEXT STEPS
The ESR process helped the team better understand how
mining design can limit or enhance important ecosystem
services in the proposed mining region. The ESR results will
be presented and discussed during the Jacaré project’s feasibility phase by managers and directors in order to inform the
mine’s design and development. The ESR team is planning
continued engagement with the regional government,
nongovernmental organizations, academic institutions, and
companies in the area to further investigate the findings
of the ESR and to develop best practices for managing the
ecosystem services most relevant to Anglo American.
Anglo American’s ESR team recommends incorporating
ecosystem service dependence and impact assessment into
every project plan developed by the company. The team
plans to use this experience as a model for other Anglo
American project development processes to follow, highlighting the following factors important for success:
Understand the environmental and social characteristics of the site—especially the surrounding areas—and
early in the process identify the stakeholders who
should be engaged in the assessment.
Hold frequent ESR team meetings, always involving
the site team, to ensure the ESR is accurate, decisionrelevant, and co-owned by decision makers.
Consult internal and external experts whenever
possible to speed the research process and bring
external validity to the ESR results.
The Corporate Ecosystem Services Review Case Study: Anglo American
REFERENCES
ACKNOWLEDGMENTS
Anglo American. 2012. “Sustainable Development Report 2012.” Online
at: <http://www.angloamerican.com/~/media/Files/A/Anglo-American-Plc/
reports/AA-SDR-2012.pdf>.
The authors thank the ESR team at Anglo American (Nickel, Iron Ore
Brazil and Niobium & Phosphate Business Units), Renato Armelin (GVces),
and Nolan Morris (WRI) for their input and contributions to this case study.
This case study was helped along by WRI’s Hyacinth Billings, Craig Hanson,
Nick Price, and Mariana Quadros, as well as Fernanda Gimenes (CEBDS),
Elaine Teixeira (CEBDS/ Padma), and Alston Taggart.
Anglo American. 2013a. “Sustainable Development: Environment.” Online
at: <http://www.angloamerican.com/development/approach-and-policies/
policies-standards-commitments/environment>.
Anglo American. 2013b. “Sustainable Development: SEAT.” Online at:
<http://www.angloamerican.com/development/social/seat>.
Anglo American. 2013c. “Anglo American ESR Report.” Anglo American
Internal Document.
Marengo, J.A., C. A. Nobre, G. Sampaio, L. F. Salazar, and L. S. Borma.
2011. “Climate change in the Amazon basin: Tipping points, changes in
extremes, and impacts on natural and human systems.” Online at: <http://
link.springer.com/chapter/10.1007/978-3-642-05383-2_9#page-1>.
Sedjo, Roger. 2013. “Comparative Life Cycle Assessments: Carbon Neutrality and Wood Biomass Energy.” Online at: <http://www.rff.org/RFF/Documents/RFF-DP-13-11.pdf>.
ABOUT THE AUTHORS
Suzanne Ozment is an Associate with the People and Ecosystems
Program at WRI.
Contact: [email protected]
This case study is a product of Parceria Empresarial pelos Serviços
Ecossistêmicos (PESE), a partnership among companies and civil society
to demonstrate the business benefits of ecosystem services in Brazil.
PESE is implemented by the World Resources Institute (WRI), the
Brazilian Business Council for Sustainable Development (CEBDS), and
the Center for Sustainability Studies at Getúlio Vargas Foundation (GVces),
with support of the U.S. Agency for International Development (USAID).
For more information, go to <www.wri.org/pese>.
This case study is made possible by the generous support of USAID.
The contents are the responsibility of World Resources Institute and do not
necessarily reflect the views of USAID or the United States Government.
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solutions that protect the earth and improve people’s lives.
Francisco Almendra was an Associate at WRI, and currently works
on digital empowerment of slum communities in Brazil.
Contact: [email protected]
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